Las Vegas--Mileage is the universal measuring stick for vehicle maintenance and repair. Last year's rising fuel prices meant fewer miles driven and fewer opportunities for service. David Portalatin of The NPD Group, whose company collects survey data from aftermarket distributors and consumers, outlined the ramifications of this trend on Nov. 2 at the Automotive Aftermarket Product Expo (AAPEX).
"Our ultimate end consumer is the vehicle," Portalatin said. "If it is used less, it will consume less."
Fuel prices reached a record high of $3 a gallon in July 2006, which corresponds with a huge dip in miles driven, Portalatin said. That behavioral change mirrors that of the fuel crisis of the '70s, he said, adding that in 2006 there was only a 1/10 of a percent increase in miles driven when compared to 2005.
"Eighty percent of consumers base their automotive maintenance intervals on mileage, with the average oil change interval occurring at 3,840 miles," Portalatin said. "Overall, driving fewer miles could mean there would be fewer maintenance intervals each year."
Regardless of whether it's a do-it-yourself (DIY) or a do-it-for-me (DYFM) customer, there's a general decline in aftermarket purchases, Portalatin said. "Nearly 40 percent of transaction decline came from the $25,000-$49,999 income level" he said. "We need to reinvigorate and turn this around."
More dollars, less volume
"We continue to see dollar-volume growth in the channel," Portalatin said. "We're selling less stuff for more money."
Auto parts sales are up 5 percent over last year, he said, adding that purchasing decisions are based mostly on value, rarely on price. Consumers keep on purchasing premium items such as synthetic oil and quality spark plugs, he said.
Vehicle appearance enhancements offer an opportunity for the aftermarket this year, Portalatin said. Twelve percent of consumers surveyed said they plan on spending more on accessories in 2007, and 4 percent said they'll spend less. Younger drivers spend more to personalize their vehicles, he added.
Falling prices release pent-up demand
As fuel prices fall by more than 60 cents, consumption goes up, Portalatin said. "The prices are still higher than they were a year ago, but consumers are happy." This behavior results in exuberance over falling prices, he said, adding that more miles will be driven this fall.
"We have to do a better job of educating consumers on the benefits of maintenance and fuel savings," Portalatin said. "We also have to leverage consumer attitudes favoring appearance spending."
Opportunity in mobile audio
Spending on consumer electronics is up 28.5 percent over last year, with no noticeable increase in disposable income, Portalatin pointed out. "What are you going to do to get people to spend more?" he said. "Where is the digital camera of the automotive aftermarket?"
Significant increases in spending are occurring in mobile audio, Portalatin said. "The aftermarket isn't getting their fair share of it." New, innovative products generate interest, he said. "What is the next iPod for the aftermarket?"
